Spot gold prices retreated on Monday, dropping 0.9% to trade at $4,049.90, as escalating hostilities in the Gulf region reignited concerns over global inflation and the trajectory of U.S. interest rates.
The decline in the non-yielding metal reflects a broadening risk-off sentiment driven by energy-market volatility.
Renewed tensions in the Gulf have pushed oil prices higher, adding to cost pressures that traders fear could force the Federal Reserve to maintain a hawkish stance or even consider rate hikes.
This dynamic has simultaneously bolstered the U.S. dollar, creating a dual headwind for gold.
The move follows a period of significant market stress, with global bond markets plunging earlier in the week amid fears of prolonged disruption.
Gold had already touched a two-month low on Thursday, pressured by uncertainty surrounding the U.S.-Iran conflict and a stronger greenback.